HSBC in second deal since re-launch

The UK arm of HSBC Private Equity has done its second deal since returning ‘to the UK mid-market proper’ after a 5-year hiatus that saw the spin-out of its in-house private equity group.

Mid-market focussed HSBC Private Equity has led a management buyout of UK plastic company Britton Group from UK private equity firm LDC for £77 million ($153 million; €100 million). The deal follows HSBC’s buyout of UK utility monitoring company Transmission and Distribution Group last month, and is its second since re-launching its UK private equity division.

HSBC has been absent from the UK mid-market since 2003 when HSBC Private Equity spun out to become Montagu Private Equity. November 2007 “mark[ed] our return to the UK mid-market proper for the first time in five years”, said Mahmoud Atalla, who now leads the firm after having rejoined HSBC from Montagu.

Mahmoud Atalla

The deal for Britton, which is a flexible packaging business that produces 80,000 tonnes of plastic film and converted products annually, includes a £43 million senior and mezzanine debt financing package that was arranged and underwritten by HSBC Leveraged Finance, another division of HSBC Group.

LDC backed a management buyout of Britton for £42 million in 2004, and its operationally focused team “took out a lot of inefficiency” from Britton, said Atalla. The LDC team also moved the company into areas of higher margins and higher growth, he said.

HSBC will seek to continue growing the company both organically and through acquisitions, “drawing upon the HSBC name for access to deal flow”, according to Atalla.

Britton’s Management team is led by chief executive Mike Clark, who will remain in his position and retain a substantial financial investment.

HSBC firm invests in opportunities with an equity requirement of £5 million (€6.7 million; $9.8 million) to £50 million.

LDC is a member of Lloyd’s TSB Group and makes private equity investments of £2 million to £100 million in UK companies with profits in excess of £1 million. The firm’s portfolio is valued in excess of £2 billion.